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SME BUSINESS LOAN FINANCE IN CANADA
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Canadian business financing offers diverse options to fuel your company's growth and success.
Struggling to secure the funds you need for your business? Discover the best financing solutions in Canada today!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer CANADIAN BUSINESS FINANCING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Canadian Business Financing Solutions
When it comes to Canadian business financing and loans, there are some surprising, simple, yet powerful—shall we call them’ tricks’—when the small business owner or financial manager needs to measure current and future financing needs.
CANADIAN BUSINESS FINANCING - WHAT YOU NEED TO KNOW
Navigating the complexities of Canadian business financing can be a challenging experience for business owners. With various financing options available, from traditional bank loans to alternative funding solutions, let the 7 Park Avenue Financial team help you understand the best approach to securing the necessary capital for business growth.
THE TIMING OF ASSET TURNOVER IS CRITICAL - FASTER IS BETTER
Speed counts in many aspects of business - not always, but often. So, the speed at which you turn assets into cash will ultimately dictate the type of finance your firm needs to reach the goal line.
THE INVENTORY FINANCING CHALLENGE
It’s essential, though, to look at the trends in those numbers over time, not just on any one day. Let’s take inventory as an example.
Inventory financing can help manage working capital costs essential for day-to-day operations. Yes, you want to know how often your inventory turns (Sales / Cost of Sales). It’s necessary, but it won’t, on its own, dictate the overall health of your company.
3 CRITICAL ASSET CATEGORIES IN YOUR BUSINESS: INTANGIBLE ASSETS
As we’ll nickname them, the GANG OF FIVE dictates how you use those assets. They are:
A/R
INVENTORY
FIXED ASSETS/EQUIPMENT
INTANGIBLE ASSETS
LEASEHOLD IMPROVEMENTS
DSO AND CASH FLOW ARE IMPORTANT BUSINESS SUCCESS MEASUREMENTS
Knowing your DSO, ‘ day’s sales outstanding, “simply tells your company how long it takes to turn over your accounts receivable in the short term.
Because you are selling on credit, you need financing to support the sales growth of your A/R levels. Companies can address receivable financing via asset based funding in the following manner -
Factoring (Traditional)
Confidential Receivables Finance
PURCHASE ORDER FINANCING
Commercial bank lines from Canadian chartered banks/business credit union financing services
Non-bank asset-based lines of credit that are individual or combos of A/R and inventory margining. A financial institution is responsible for approving and disbursing loans for receivable financing.
DOES YOUR FIRM HAVE PROGRESS PAYMENT CHALLENGES
When you do an excellent job of granting credit and collecting A/R, even more, expensive alternative finance solutions such as factoring make strong sense to cover the loan amount they seek and how much financing they need.
Many clients we meet are in the PROGRESS PAYMENTS business. Things get a bit tricky here, but they don’t have to be. If you can get a down payment, that helps - many firms do that.
And guess what? Progress payments can be financed if you’ve got the right financing partner.
The loan amount and personal guarantee are critical factors in securing financing for progress payments.
We’ve touched on inventory finance already, so let’s look at Asset turnover in general. You typically use your non-current assets to operate your company and generate revenues.
This is particularly important if you are in a capital-intensive business. We meet with many service-based clients who have little need for asset finance.
4 IMPORTANT BUSINESS FINANCE AND WORKING CAPITAL SOLUTIONS
At the other end of the spectrum are companies who need to utilize:
EQUIPMENT FINANCE - Managing asset acquisition via lower monthly payments
SALELEASEBACKS
BRIDGE LOANS
ASSET BASED LINES OF CREDIT THAT INCLUDE FIXED ASSETS
The GOVERNMENT OF CANADA SMALL BUSINESS LOAN PROGRAM
The Canada Small Business Financing Program (CSBFP) is a federal government-backed program that shares lending risk with financial institutions.
The Canada Small Business Financing Program helps businesses secure loans for business assets through financial institutions. While the interest rate will always be higher in asset based financing solutions it becomes a question of access to capital versus cost of capital and higher interest rates than traditional bank loans and bank pricing on business credit solutions.
KEY TAKEAWAYS
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Traditional Bank Loans - Understand the application process, interest rates, and requirements of conventional bank loans.
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Government Business Loans - Explore government-backed loan programs designed to support Canadian businesses. These loans may include a registration fee, which amounts to 2% of the loan and is payable to the lender, with the option to finance it. Additionally, lenders may ask for an unsecured personal guarantee for the initial amount of the loan. They may also request a joint personal guarantee if there is more than one borrower.
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Alternative Funding Solutions - Learn about non-traditional financing options like peer-to-peer lending and online lenders.
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Business Lines of Credit—Discover how lines of credit can provide flexible access to funds to manage cash flow.
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Equipment Financing - Gain insights into financing options for purchasing or leasing business equipment.
CONCLUSION
As we have said, there are numerous ways to measure the type of business loan, the amount of financing small businesses need, and what type of financing works best for your particular situation.
Asset financing solutions often de-emphasize the need for a high credit score, which is required in more traditional funding solutions.
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who assists SME's in securing funds for capital business needs.
FAQ
What are the main types of business financing available in Canada?
Canadian business financing includes traditional bank loans, government business loans, alternative funding solutions, business lines of credit, and equipment financing.
How can I qualify for a traditional bank loan in Canada?
It would help if you had a solid business plan, a good credit history, and collateral to qualify for a traditional bank loan. Banks also consider your business's financial statements and cash flow.
What are government business loans, and how can they benefit my business?
Government business loans are loans that the Canadian government guarantees to support small and medium-sized businesses. They often offer lower interest rates and favourable terms to help companies to grow. They can also fund tenant intangible assets, franchise fees, purchasing leasehold improvements, intellectual property, commercial real estate etc. Borrowers can also access bdc loans which are financed by the government crown corporation.
Are alternative funding solutions a good option for Canadian businesses?
Yes, alternative funding solutions such as peer-to-peer lending, online lenders, and merchant cash advances can be excellent options for businesses that may not qualify for traditional loans.
How can a business line of credit help manage cash flow?
A business line of credit provides flexible access to funds, allowing you to draw and repay as needed. This helps manage cash flow fluctuations and cover unexpected expenses.
What is invoice factoring, and how can it help my business?
Invoice factoring involves selling your outstanding invoices to a factoring company at a discount. This provides immediate cash flow without waiting for customer payments.
How does equipment financing work for Canadian businesses?
Equipment financing allows businesses to purchase or lease necessary equipment by spreading the cost over time. This helps manage cash flow and maintain capital for other expenses. Real property improvements are also eligible for financing under this program.
What are the benefits of crowdfunding for Canadian startups?
Crowdfunding enables startups to raise small amounts of money from many people. This provides funding and helps validate your business idea and build a customer base.
What is a merchant cash advance, and when should I consider it?
A merchant cash advance provides a lump sum of cash in exchange for a percentage of future sales. It suits businesses with high credit card sales but should be used cautiously due to high costs.
How can private lenders help Canadian businesses?
Private lenders offer more flexible terms and faster approval processes than traditional banks. They can be a good option for businesses needing quick access to capital. The lender's prime lending rate is often used to determine the maximum chargeable interest rates for lines of credit.
How can I improve my chances of getting approved for business financing?
Improve your credit score, prepare a detailed business plan, and maintain accurate financial records. Demonstrating strong cash flow and collateral can also enhance your chances of approval.
What role does credit score play in securing business financing?
Credit scores significantly impact your ability to secure business financing. Lenders use credit scores to assess risk, with higher scores generally leading to better loan terms.
Can I get a business financing if my business is new?
New businesses can access financing options such as government grants, startup loans, and crowdfunding. However, traditional bank loans may be more challenging without an established credit history.
